Google Energy has signed a deal to purchase 114 megawatts of energy from a wind farm in Iowa, marking the first deal done by Google's energy subsidiary.

Google on Tuesday announced that it signed a 20-year power purchase agreement with wind project developer NextEra Energy Resources. Google Energy will buy the bulk of the energy produced from the Story II Wind Energy Center in Iowa's Story and Hardin counties.

Buying wind energy is part of Google's efforts to reduce its carbon footprint and operate as a carbon-neutral company, said Google Senior Vice President of Operations Urs Hoelzle, in a blog post.

The deal is significant in that it's the first done by Google Energy, a subsidiary created in December last year. When news of Google Energy came out, there was a great deal of speculation as to why Google, which is active in renewable energy and efficiency, would want to operate a wholly-owned subsidiary.

Google subsidiary Google Energy signed a deal to purchase wind energy from a wind farm in Iowa at a predetermined price for 20 years.
Google

The Story wind farm deal helps explain why. Google Energy will be purchasing energy directly from the project developer and reselling it on the spot market for energy. Having an energy subsidiary approved by the Federal Energy Regulatory Commission (FERC) allows Google to buy and sell on the wholesale market.

Typically, companies seeking to buy clean energy need to invest in on-site renewable energy, such as a solar array, or to buy renewable energy certificates, both of which Google has done. Renewable energy certificates (REC) are assets that represent the environmental attributes of energy. They can be bought and sold by third parties.

By buying directly from the wind farm, rather than RECs, Google thinks it is providing more benefit to clean-energy developers, which need long-term financing, said Hoelzle.

"By contracting to purchase so much energy for so long, we're giving the developer of the wind farm financial certainty to build additional clean energy projects. The inability of renewable energy developers to obtain financing has been a significant inhibitor to the expansion of renewable energy," he wrote.

About the author

Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
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